OVERDRAFT charges on most current accounts are too complex and banks should be forced to simplify them, campaigners say.

Bank charges can be complicated as our buying habits vary from month to month [GETTY]

Over recent years, banks have implemented a wide variety of approaches to charging customers who go into the red.

As well as imposing interest charges as they have always done, some banks now have a fixed fee if an account holder uses their overdraft during a given month. Other providers charge customers a certain amount every day they are overdrawn.

According to analyst Moneyfacts.co.uk, this means fees for using unauthorised overdrafts in particular can differ greatly from one institution to the next.

Spokeswoman Sylvia Waycot said that going £100 beyond your authorised overdraft limit on one popular account could cost almost £60, but just £16 at a rival bank.

"The number of charges and scenarios on current accounts can be very confusing. This is because the way we spend tends to vary from month to month as we cope with bills, birthdays and holidays," Waycot said.

"Those in credit who do not use overdrafts have little to worry about but those who use their overdraft regularly can see charges vary dramatically from month to month, especially when the unplanned happens."

Those in credit who do not use overdrafts have little to worry about but those who use their overdraft regularly can see charges vary dramatically from month to month, especially when the unplanned happens

Sylvia Waycot, Moneyfacts.co.uk spokeswoman

Moneyfacts added that banks were increasingly opting to impose daily charges rather than fees which kicked in once a month if the customer went overdrawn at any point during that period.

Some providers maintained that the former approach was more transparent and easier to understand, Moneyfacts said. However, industry watchdog the Competition and Markets Authority (CMA) has recently recommended a full inquiry in business and personal banking in the UK.

The CMA said overdraft charges in particular meant it was often too hard for customers to make comparisons between banks.

This meant banks had less incentive to compete, the CMA added, with the possible result that overdraft charges were higher than they might otherwise be.

Waycot added: "It is hardly surprising that current accounts are now under an uncomfortable spotlight and there are attempts being made to address the lack of transparency.

"But as daily charging shows, clarity has in many instances failed to reduce fees.

"Charges should not be a mystery to work out nor a nasty surprise.

"And they certainly shouldn't be so complicated that only those with a clear head can face calculating them."

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Moneyfacts is now calling on regulators to force banks to show customers more clearly how much it will cost to go overdrawn.

"The only way for real clarity is for all current accounts to follow the principle of personal loans, where borrowing is subject to one APR calculation, which includes the costs of rates and fees that are paid if the borrower uses the service," Waycot said.

New figures from Opinium Research showed many people were opting for "premium" accounts, which charge fixed monthly fees, as they offered better deals on overdrafts.

The firm's managing director James Endersby said that this highlighted the "myth" of free banking.

"But despite the fact that 'free' accounts are often subsidised by other costs such as overdraft charges, the nation remains strongly in favour of the so-called free-banking model," he said.